What Can I Get With a 635 Credit Score?

A credit score numerically represents an individual’s creditworthiness and financial reliability. The most recognized scoring models, FICO and VantageScore, typically use a scale from 300 to 850. This score influences a broad spectrum of financial interactions, from borrowing money to securing housing. This article explains the implications of a 635 credit score and details the types of financial products and services generally available to individuals within this credit range.

Interpreting a 635 Credit Score

A 635 credit score falls within the “Fair” category for both the FICO and VantageScore models. Specifically, FICO defines “Fair” as scores between 580 and 669, while VantageScore places it between 601 and 660. This classification indicates that while the score is not considered poor, it is below the average credit score in the United States, which was 715 for FICO in 2023. Approximately 17% of consumers have scores within this “Fair” range.

Lenders typically view a 635 credit score as representing a moderate level of risk. While it does not necessarily prevent access to credit, it signals to financial institutions that an applicant may have a history of some credit difficulties or a shorter credit history. As a result, individuals with a 635 score may find that approval for financial products is possible, but often comes with less favorable terms. This can include higher interest rates, increased fees, or smaller loan amounts compared to those with higher credit scores.

Credit Cards and Personal Loans

Individuals with a 635 credit score can generally access various credit card options, though they may not qualify for cards offering premium rewards or the lowest interest rates. Secured credit cards are a common choice, requiring a refundable security deposit that typically sets the credit limit. These cards can serve as a tool for building a positive credit history through responsible use.

Unsecured credit cards designed for those with “Fair” credit are also available. These cards do not require a security deposit but often come with higher Annual Percentage Rates (APRs). Credit limits on these cards are usually conservative at first. Consistent on-time payments and keeping credit utilization low can help improve the score, potentially leading to credit limit increases and access to better card products over time.

Securing a personal loan with a 635 credit score is generally feasible, as many lenders consider this within their acceptable range. The minimum credit score needed for a personal loan typically falls between 610 and 640. However, interest rates will reflect the perceived higher risk associated with a “Fair” score. Personal loan APRs for this credit tier can vary widely depending on the lender, loan amount, and repayment term.

Applicants may also face requirements for a co-signer or collateral, especially for larger loan amounts, to reduce the lender’s risk. While approval is likely, the higher cost of borrowing means the total amount repaid will be considerably more than for borrowers with higher credit scores. Comparing offers from multiple lenders is important to find the most favorable rates.

Auto Loans and Mortgages with a 635 Score

Obtaining an auto loan with a 635 credit score is generally possible, as many lenders offer financing to individuals in the “Fair” or “Nonprime” credit tiers. However, interest rates will be significantly higher than those offered to borrowers with excellent credit. For instance, average APRs for new car loans for this credit range are around 9.83%, and used car loans average 13.74%.

Making a larger down payment can help mitigate higher interest rates by reducing the loan amount and the lender’s risk. Despite the higher costs, a 635 score does not typically preclude someone from securing vehicle financing.

For mortgages, a 635 credit score presents more limitations for conventional loans, which generally require a minimum score of 620. Government-backed Federal Housing Administration (FHA) loans are designed to be more accessible to borrowers with lower credit scores. An FHA loan usually requires a minimum FICO score of 580 for a 3.5% down payment. If the score is between 500 and 579, a 10% down payment may be required.

While the FHA sets minimums, individual lenders may impose higher credit score requirements. Interest rates for FHA loans with a 635 score will be higher than for those with excellent credit, leading to increased monthly payments and overall loan costs. A 635 score provides access to FHA financing, but understanding the financial implications of higher interest rates is important.

Impact on Other Financial Matters

A 635 credit score can influence other areas of personal finance, including renting an apartment. Landlords often conduct credit checks to assess a prospective tenant’s financial responsibility. A “Fair” credit score of 635 may lead landlords to scrutinize the application more closely.

Landlords might request additional assurances, such as a higher security deposit or a co-signer. In competitive rental markets, a lower credit score could also put an applicant at a disadvantage compared to others with stronger credit profiles.

Utility services, including electricity, gas, and water, often involve a credit check when establishing new service. While a low credit score typically does not result in a denial, providers may require a security deposit, ranging from $100 to $250. Applying for utility services usually involves a “soft credit check,” which does not negatively impact the credit score.

Credit scores also play a role in determining insurance premiums, particularly for auto and home insurance. Many insurers use credit-based scores to predict the likelihood of future claims. A lower credit score can correlate with a higher perceived risk, potentially leading to higher insurance premiums. In states that permit the use of credit scores for insurance pricing, an improved credit score can lead to significant savings.